Bank of America, Wachovia Profits Plunge
Tuesday, January 22, 2008
CHARLOTTE, N.C. - Bank of America Corp. said Tuesday its fourth-quarter earnings fell by 95 percent and Wachovia Corp. reported its earnings tumbled 98 percent, with both banks citing the lending crisis.
Net income at Bank of America declined to $268 million, or 5 cents per share, in the three months ended Dec. 31 from $5.26 billion, or $1.16 per share, a year ago.
Wachovia said Tuesday its fourth-quarter earnings tumbled due to a $1.7 billion reduction in the value of certain portfolios and $1.5 billion set aside to cover bad loans.
Fourth-quarter net income fell to $51 million, or 3 cents per share, from $2.3 billion, or $1.20 per share, during the same period the previous year.
Excluding merger-related expenses, Wachovia earned $160 million, or 8 cents per share, during the fourth quarter.
Analysts polled by Thomson Financial, on average, forecast earnings of 33 cents per share for the quarter. One-time charges are not always included in analysts' estimates.
Wachovia took a $1.7 write-down during the quarter due to weakening credit markets. Banks have been forced to reduce the value of bonds and debt backed by mortgages and other consumer loans that have increasingly defaulted in recent months.
Because of rising delinquencies and defaults, Wachovia also set aside $1.5 billion to cover losses.
Bank of America's revenue fell 32 percent to $12.67 billion from $18.49 billion last year.
The quarter included results from LaSalle Bank, which Bank of America purchased on Oct. 1.
Analysts expected earnings of 18 cents per share on revenue of $13.24 billion, according to a poll by Thomson Financial. The earnings estimates typically exclude one-time items.
Fug off Hicks